Here We Go Again

Mon, May 13, 2013 - 11:28am

Another week in the barrel begins. There's a lot going on so come on in.

Jeez, where do we start on this fine Monday? Maybe we should start this week where last week ended? You'll recall that, back on Thursday, some hedge fund deltabravo whom nobody had ever heard of, posted a tweet that Jon "BernankButtBoy" Hilsenrath was about to release an article discussing how The Bernank might go about "tapering" QE∞. Though clearly the real object of this scam was to talk down an overheated stock market just a bit (think Mr. Andrea Mitchell and his "Irrational Exuberance" talk back in the 90s), the impact it had on gold was instantaneous. The Comex closed on Thursday at 1:30. The offending tweet came out at about 2:00. Before gold could re-open on the Comex at 8:20 on Friday, it was down over $40. Very nice. And then, of course, in order to not dampen the spirits of the HFTs too much, the ButtBoy article didn't actually get released until after the NYSE close on Friday. The impact? As I type, gold is still down about $35 from Thursday's close. Equities, of course, are about unchanged.

And this has once again emboldened the shorts to drive price lower as they rightly feel that all of the momentum is on their side. As we start the week, the metals look almost certain to test hoped-for support, gold around $1400 and silver near $23. From there, maybe CIGA BoPelini will be right and all of this madness will end. ( That'd sure be nice but I'm not getting my hopes up too high.

If you missed my CoT summary from Friday, you can find it here: There wasn't a lot of earth-shattering stuff in there this week but I want to re-emphasize some points I made toward the end of the comment. Look at these facts:

Finally, lets once again compare the Cartel net positions of last Tuesday with The Cartel net positions of 9/11/12, just two days before the announcement of QE∞.

  • On 9/11/12, The Gold Cartel was net short 237,091 contracts. That's 23,709,100 troy ounces or a whopping 737 metric tonnes of paper gold.
  • As of last Tuesday, The Gold Cartel is net short 87,719 contracts. That's 8,771,900 troy ounces or just 272 metric tonnes of paper gold. A reduction of potential settlement obligation of over 63%.
  • On 9/11/12, The Silver Commercials were net short 47,272 contracts. That's 236,360,000 troy ounces of silver, which is a whopping 7,351 metric tonnes of paper silver or about 30% of global silver mine production for 2012.
  • As of last Tuesday, The Silver Commercials were net short 14,456 contracts. That's 72,280,000 or 2,248 metric tonnes of paper silver. A reduction in potential liability of over 69%!!
  • And finally, here's the most interesting comparison. On 9/11/12, the Silver Commercials were:

    • Long 32,206 and
    • Short 79,478

    Nearly eight months, $450B new QE dollars and $13 in silver later, the Silver Commercials are:

    • Long 65,703 (+104%) and
    • Short 80,159 (+0.85%)

    Look, I am 100% convinced that everything that has happened since mid-September of last year has been completely designed by the Bullion Banks in order to reduce/eliminate their net short positions. After the HUGE rally of August into September 2012, where silver moved from $26 to $35 and gold from $1600 to $1800, The Bernank literally caught the banks with their shorts down, unprepared for the game-changer that is QE∞. Since then, in a increasingly desperate drive to reduce their liability, the banks have successfully moved paper prices lower, even in the face of the extraordinarily strong fundamentals, by convincing the Specs to sell through coordinated raids and chart-painting. Soon the fundamentals will overwhelm everyone but look again at what the banks have been able to accomplish.

    They were net short an astounding 737 metric tonnes of paper gold at the time QE∞ was announced. As of last Tuesday, they've trimmed that liability by over 63%, all the way back to about 272 metric tonnes. Look at this another way. All the way down from $1800, the banks have been buying and covering. We're now told that the "bull market in gold is over" yet the banks continue to buy, not sell. Doesn't that tell you anything?

    Now consider silver. Yes the picture looks the same. The banks have reduced their net short position by more than 2/3 from 30% of annual silver production back to 10%. But that's not the story, now is it? Look again at the gross numbers. At $36 silver, the banks (mainly JPM) were short 80,159 contracts. As of last Tuesday, with silver at $24, the banks were short 79,478. Virtually unchanged. But look at the "other commercials", the "everyone but JPM crowd", the "raptors" as Uncle Ted calls them. When silver was $36, they were long a gross total of 32,206. As of last Tuesday, the size of that position had more than doubled to 65,703! Again, I ask you:

    • If silver is in a "bear market", why are these insiders buying?
    • As silver has been beaten lower, why have these commercials been buying and not selling?
    • Going forward, do you want to side with them or with the Large and Small Specs?
    • Which side, the commercials or the specs, will be proven right in the end?

    OK, moving on. Recall that there was much interest that the GLD had actually added metal back on Thursday. This caught nearly everyone by surprise as it was the first addition of metal since February. Well whaddayaknow. On Friday, nearly the exact same amount of metal came right back out of the GLD, leaving it with a 2-day net change of +0.18 metric tonnes. With the hammering that gold took on Friday, you can imagine that the "inventory" downtrend resume in earnest later today. For your reading pleasure, here's the latest from our pal Alasdair Macleod at GoldMoney. He has issues with GLD, too, and he cites a few of them here:

    And this is fun. I remember that not too long ago, folks like me were thought of as Loons and TinFoilHatters for suggesting that the days of dollar hegemony were numbered. Well, lookyhere. Even ole CNBS is now getting in on the act: Of course, they still don't explain it as well as John Butler did a year ago: And isn't the anti-gold bias just amazing? Nowhere in the article is it even postulated that perhaps the reason China is hoarding so much gold is because they are planning to back the yuan with gold as a fiat alternative. In a competitive global economy, wouldn't that make the yuan far more valuable than ever-devaluing fiat? And wouldn't that competitive edge be the impetus to establish the yuan as a World Reserve Currency much faster than without a gold backing? Ahhh...I digress. That type of out-of-the-box thinking is just craziness, isn't it? Well, we'll see.........

    OK, that's all for today. Have a great Monday and let's just hope that we don't get the tests of support that appear to be coming.


    About the Author

    turd [at] tfmetalsreport [dot] com ()


    May 13, 2013 - 11:30am
    May 13, 2013 - 11:31am

    Condolences to Puck's family

    I didn't know him well but my condolences to his family. Soldier on Turd. Time to do some reading.

    May 13, 2013 - 11:31am


    Even a blind squirrel...................................

    Furst for the first time, Thanks Turd for your dedication and hard work.

    Now off to read the goods.

    May 13, 2013 - 11:31am

    Indian gold imports likely to exceed last year's level to 900 to

    Last year, India, the world's largest consumer, imported 860 tonnes of the precious metal, while demand stood at 864 tonnes in the same year. NEW DELHI: India's gold imports are likely to exceed last year's level to around 900 tonnes in the current calendar year on higher demand despite government curbs on its shipments to rein in current account deficit, a top official of World Gold Council said today. Last year, India, the world's largest consumer, imported 860 tonnes of the precious metal, while demand stood at 864 tonnes in the same year. "Looking at the trend in the initial 4-5 months of this year, we expect gold demand and imports to be higher than the last year at around 900 tonnes," World Gold Council (WGC) India Managing Director Somasundaram PR told PTI.

    Fr. Bill
    May 13, 2013 - 11:32am

    Thurd's the best I can do ...

    .... but you take what you can get!

    May 13, 2013 - 11:34am
    May 13, 2013 - 11:34am


    Hello Fellow Turdites. Just wanted to let you know that my site SRSrocco Report is now live today. This is one of the posts on the site:

    THE BIG FALLACY: Silver Trading More Like A Base Metal

    The notion that silver has been recently trading more like a base metal is more a fallacy than fact. Some of the top technical analysts have been stating that the reason why the price of silver has not held up as well as gold is due to the fact that silver trades more like copper than gold. Basically, if the "King" of the base metals suffers... so will silver. While this makes good press, the reality is much different if we look at the data below.

    Below is a one year chart of the price of silver:

    Here we can see that when the FED announced QE3 on Sept 13, the price of silver was $33, but by May 6, 2013, the price had fallen to $24. This was a 27% decline in 9 months. Gold fell from $1,700 to $1,450 in the same time period (14% decline).


    THE BIG FALLACY: Silver Trading More Link A Base Metal

    May 13, 2013 - 11:36am

    And re Puck

    Puck did, in fact, succumb to his cancer last month. More info here:

    May 13, 2013 - 11:37am

    RIP Puck.


    May 13, 2013 - 11:44am

    Btw, Tabberto...

    This was great:

    C&P below:

    Submitted by Tabberto on May 11, 2013 - 2:02am.

    So, this week I met with a very successful hedgefund (compounding 11% yoy and minimum $1m buy-in). These guys are smart as shit but as is often the case are utterly ignorant of gold machinations. To be fair to them they were all ears, but I think they perceive Gold to be 'too simple' an investment. A small allocation in futures and options sure but physical - no chance. It hadn't occurred to these guys that there might be a fiddle going on and when I ran them through Turdville 101 they were aligned with the basic logic of it. These guys are VERY concerned by what they call 'the plumbing' of markets but are loading up on cheap tail risk so that as and when we have panic again they would clean up.

    Further to that, BMO sent me a 'research' note on Gold which was simply an instruction to sell because GOFO was turning lower......and a recommendation to visit FT Aplhaville for insight into why Gold is backwardated. To say this pissed me off was an understatement so I engaged in a lengthy reeducation process with the BMO analyst. Kaminska at the FT does NOT understand Gold leasing, she seems to be confusing it with swapping, but either way the idea that an investment bank would sent its clients to FT Alphaville's biased opinion blog (and wow is she biased against 'Gold conspiracy theorists') is a genuine new low in Investment Bank coverage of Pmetals. Anyway, I challenged BMO to borrow Gold at a negative rate (by inference what Alphaville and he was claiming is going on) and have had nothing but tumbleweeds. They rely on GOFO but fail to understand the spread on GOFO itself is 5bp - unless you are subscribing to Sandeep Jaitly's Basis Service and are aware of the maths that goes into judging the cash Gold market you are necessarily going to misjudge the movements of the wizards behind the LBMA curtain. The analyst even had the cheek to tell me he put his 'note' out to ensure people remain in their jobs - didnt seem to understand that he might be wrong (!) and accentuating the problem by getting fund managers to puke at the exhaustion lows!

    Anyway, I recommend remembering that the market isn't remotely aware of the near 5 year regulatory investigation into Silver manipulation (that usually gets a somewhat surprised look but no questions ;) )

    The market isn't aware of Central Bank leasing/swapping/dubious Gold accounting practices

    The market isn't remotely aware of how 'price discovery' works in precious metals

    The market isn't aware that Gold and Silver are currencies, they see them simply as overbought commodities

    The market isn't aware that there are already capital controls in place regarding the movement of customer Bullion (switzerland and elsewhere deliveries are only being allowed to other LBMA members, not outside of the playpen beyond $100,000)

    All of this will change in due course guys, it isn't much fun in the meantime but this is our cross and it must be borne with bravery and conviction.

    May 13, 2013 - 11:48am

    SRSrocco Report Cuddos

    Grats SRSrocco on getting that report website going, we know its been a challenge....its added to the radio dial to tune in on my browser :). Best of luck with it!

    May 13, 2013 - 11:55am

    It makes me angry

    It makes me angry that Puck didn't get to live to see the breakdown of the cartel's hold on the metals and the vindication of all his views and ideals.

    May 13, 2013 - 11:56am

    re Chinas Gold Appetite

    from the desk of SCOTIA, LBMA manning the defences, this is what I have to deal with on a daily basis:

    Overall the same factors are in play i.e. those that are ploughing ahead with a ‘risk on’ strategy versus those that are hoarding physical but despite the increasing tightness in the market and the enormous premiums on the SGE over London (over $50 today…see chart below) this market clearly doesn’t appear able to get out of its own way – so, despite the potential for the odd short covering rally it really does appear the tide is gradually turning against gold…..

    Hellloooo....$50 premiums sound way bearish to me, beam me up SCOTIA! Now then, where did those bars go....?

    Ned Braden twolfe81
    May 13, 2013 - 11:56am


    Have you the link to SRS site?


    May 13, 2013 - 11:57am

    REPLY NED... yes

    Ned here is the link to the SRSrocco Report

    Any comments would be greatly welcome

    May 13, 2013 - 11:59am

    A few thoughts on Puck

    I didn't know him from Adam, but I always found his insights to be helpful and humanizing.

    Here's a few things I did know about his personality: He didn't get involved in petty fights with others. He stuck to facts and fundamentals in this mission of preparation. He seemed composed and dignified in his final days.

    In many ways, he remains an example to us all in how to comport ourselves as we try our best to navigate our way forward: we should try to be a help unto others, knowing we're all flying somewhat blind into the financial storm that has been created.

    I will miss his insights and his jovial wit, and I'll trust a merciful God in dealing with human beings not according to what we deserve, but according to the worth of a great Saviour who paid a high price to make all things new.

    One final note: Puck is yet another comrade in a growing list who who never lived to see vindication. This is what disturbs me most about the financial crimes in progress: so many of us(Puck, Bob Chapman, Adrian Douglas, and countless others) have not lived to see justice, nor a remuneration on our investments. These good souls were deprived of the satisfaction of seeing good win out in their lifetime.

    I sincerely hope we all prove worthy compatriots of theirs, and can live and work to finish the mission they fought so hard to accomplish.

    May 13, 2013 - 12:04pm

    RIP Mr. Puck

    I enjoyed reading his blogspot site very much. His mind was a vast library of knowledge. You all should read through it when you have the time...hopefully it will be preserved and not taken down.

    Puck T. Smith

    May 13, 2013 - 12:08pm


    far so good, looking sweet with a higher low, for the part score, now looking for a higher high just stretching for the daily slam dunk. Come on baby, rock their world.

    so long puck, no worries, I will catch up with ya later man. God bless his soul.

    May 13, 2013 - 12:12pm

    Those Pesky Fundamentals

    Rail Car Loadings

    Short/Regional Lines

    The grass roots and foundation of the national economy is localized - the next big city or the next state. These are served by short/regional railway lines and their level of car loadings will tell you how things in the world of commerce are doing.

    These stats crashed after 08 with everything else and remained in the dumps until February 2010 when they finally showed an improvement.

    Monthly average carload during 2010 was 295,704 with an average monthly increase of 21,008

    Monthly average carload during 2011 was 337,298 with an average monthly increase of 20,497

    Monthly average carload during 2012 was 353,175 with an average monthly increase of 15,408

    As can be seen, on the surface the number of car loadings has improved each year, although by a small margin, leading one to think that the economy in on track for a come back. Now, look at the average monthly increases. These should show an actual increase over previous months. They don't. Instead they show a drop of roughly 25% in local business. This trend continues.

    You may say that the truckers are taking up the slack. Wrong. Intermodal volumes, both trailers (TOFC) or 'piggybacks' and double-stack (COFC) containers continues to grow at the expense of the trucking industry. However, this form of shipping is also showing weakness. As of year end 2012, total US rail carloads are down 4.0% from November 2011 and down 2.1% from November 2010.

    These stats are gleaned from many sources. PM me if you should like to look for yourself. One good take away from this is, the false mime that the MSM keeps touting, at the behest of their governmental masters, of an improving economy, lower unemployment, and everything rainbows and sunshine, is just so much claptrap! There is no recovery, except for the 1% that continue to rob through the Fed.

    AuTraderBilly BIGNASTY
    May 13, 2013 - 12:21pm

    I have a feeling we are now

    I have a feeling we are now firmly bottomed. Up we go!

    May 13, 2013 - 12:29pm

    For the Puck Family

    Wrong thread sorry.

    May 13, 2013 - 12:30pm

    Puck T. Smith

    Was the reason I became addicted to reading the comments section at So gifted and will be missed by all I am sure.

    Cleburne61, I loved your comment and found it a very fitting tribute to Puck.

    I hope we all prove worthy compatriots as well; Strike the root!

    John Galt
    May 13, 2013 - 12:34pm

    Wondering Out Loud re: Validity of COT Reports

    Many of us here at TFMR believe that markets are rigged and are, therefore, not behaving as they should in terms of the "fundamentals".

    Turd puts great effort into analyzing things like COT reports, and while his efforts and insights are greatly appreciated I have to wonder why we believe any of the figures that are contained in those reports.

    Don't get me wrong - I'm not questioning Turd's analysis of the "facts".

    Rather I am questioning the numbers we accept as "facts" from TPTB.

    Is it not possible that these numbers are completely made up?

    Why do we blindly accept reports that say banks are net long or net short when they could actually be net opposite?

    I know that fake COT reports would be considered wrong and illegal in a normal world, but we passed normal many exits ago.

    Urban Roman
    May 13, 2013 - 12:35pm

    RIP Puck

    I hardly knew ye. But you brought an intelligence and humanity to the group that is matched by few.

    A couple of good essays from Puck's blog:

    And an illustration:

    Northern Border
    May 13, 2013 - 12:41pm

    Cheap Plug and OFF topic

    Ok, so this is a cheap plug, OFF topic, and I totally understand if admin deletes it. However, I thought what can it hurt for trying right ???

    So after almost 10 years in the Medical Device Orthopedic sales, I am finally looking for a new place to call home. My heart is no longer in the business and need to make a move. Any Turdites in the Minneapolis/St. Paul area looking for a rock star sales rep please PM me and we can discuss my resume in detail.

    I figure if someone out here in Turdville sees this, I might get a bite or two.

    Keep Stacking and prepare accordingly.


    May 13, 2013 - 12:44pm

    The EE & Family - "Loons and TinFoilHatters"

    Thanks for another excellent post today TF. Lots of info to digest here. ALL of it insightful and will require more than a couple cups of coffee while the household is sleeping. I liked the remark: "Loons and TinFoilHatters."

    Spent yesterday with some family members. To them I'm a complete nutter. Yet I'm the only one of nine not on some sort of prescription meds. To them, I probably need 'em.

    Over baked salmon (wild Alaskan) I asked one of my more accomplished siblings, a defense attorney who has presented a case to the supreme court, whether a top public defender could get the surviving Boston "terrorist" off on an innocent charge before a jury.

    The looks of utter amazement were predictable. I mentioned Gerry Spence, a fighter in the TFMR mold, who defended Randy Weaver in the Ruby Ridge shooting. Said that the Dzhokhar Tsarnaev was far less guilty than Randy Weaver and Spence had made the fed case look like a fraud to a jury. Said that a modern Spence could do the same in the Boston case. Mentioned William Pepper. My attorney sib had never heard of him. John Grisham yes; Bill Pepper, No.

    Following alleged MLK killer, James Earl Ray's death, Pepper represented the King family in a wrongful death lawsuit, "King family vs. Loyd Jowers and other unknown co-conspirators". During a trial that lasted four weeks, Pepper produced over seventy witnesses. Jowers, testifying by deposition, stated that James Earl Ray was a scapegoat and not involved in the assassination. On December 8, 1999, the Memphis jury found . . . that the assassination plot included "governmental agencies." The jury took less than an hour to find in favor of the King family.

    The subject quickly changed. I've turned some into small stackers but few question the matrix of the EE.

    Topics for discussion, like Silver and Gold, are small yet significant manifestations of a bigger Empire. If you tell people about the twin canaries in the coal mine, (gold & silver) they point to CNN or CNBC and say gold is going down. We are all "Loons and TinFoilHatters" to the great majority of humans, friends and family included. Pretty much, our larger family is Here.

    Keep up the brilliant work, TF. You remind me of Gerry Spence.


    Gerry Spence On Why He Agreed to Defend Randy Weaver in the ...

    May 13, 2013 - 12:46pm

    Silver? Silver? Silver?

    Um, it's not there. My best friend's sister's boyfriend's brother's girlfriend heard from this guy who knows this kid who's going with the girl who saw silver taken out of the back of the LBMA last night. I guess it's pretty serious.

    (Ferris Bueller's Day Off Parity)

    May 13, 2013 - 12:48pm

    Intelligence and Mesna

    I have taken some intelligent tests and consistently score at borderline mensa level, but have never joined or taken the official test. Perhaps I fear that I won't make the cut? My best friend is far more intelligent than I am, even though I have the formal education. I simply know how to work hard and follow instructions, blended with a healthy dose of creativity. College teachers were the A students, with above average intelligence, who thrived in the academic world. I suspect, from my experience, that you will not find a greater density of intelligence in academia than you will in any other venue of life. I know a number of fairly ignorant professors.

    My best friend would be a Mensa member if he cared about such things. He dropped out of high school, completed a GED and then took one college course. He submitted all the work for the entire course at the end of the first week. The teacher got pissed and gave him an F. He had a smart-ass attitude back then. After landing a job with Motorola, he advanced into management in their maintenance division. He wrote up manuals (used in colleges) to guide troubleshooting of multi-million dollar production system for making silicon wafers. His peers were jealous and feared him. He finally quit due to their continual harassment by sabotaging systems just before his shift began. Today he works as an engineer for a TV station, keeping all their equipment running and cleaning up messes behind the rest of the employees. At age 57, he still cannot spell English words properly.

    Mensa level people are all around us--working in construction, fast food, and even writing metals blogs. On this blog I see quite few people as intelligent and deep thinking as my friend.

    May 13, 2013 - 12:51pm
    John Galt
    May 13, 2013 - 12:59pm

    @ achmachat

    If you told me that Monedas is a member of Mensa I would reply that the reality as you perceive it to be is the veil of illusion that has been pulled over your eyes to blind you from the truth.


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